THE INFLUENCE OF FACTORS ON THE MODIFICATION OF THE FINAL OPINION OF THE AUDITOR IN THE OFFICIAL REPORT:
FROM STANDARDS TO PRACTICE

Dmytrenko I.N.
Doctor of Economics, Associate Professor, Professor of the National Center for Accounting and Auditing of the National Academy of Statistics, Accounting and Auditing, Ukraine
irynadmytrenko1308@gmail.com

Abstract

The subject of this publication is the classification and systematization of factors that influence the modification of the auditor’s opinion in the official report on the accuracy of the financial statements of client companies. A cluster of influencing factors was substantiated and proposed, based on the possible presence of material misstatements, events of significant uncertainty, and full disclosures in the notes to the financial statements. On the basis of a comparative analysis of statistical data on the results of mandatory and initiative audit, the main trends in the ratio of various types of auditors' opinions and the degree of their modification, formed in the main segment of the audit services market in Ukraine, are identified. The logical chain of transforming the auditor’s professional judgment into a final opinion in a general format, as well as taking into account the effect of significant uncertainty events, is substantiated and presented. As a tool for the practical implementation of the requirements of the International Auditing Standards, Matrices of dependence of the influential groups of factors and the degree of modification of the auditor's opinion under specific circumstances and results of the assignment are proposed.

The purpose of the study was to identify and systematize the factors that influence the modification of the final opinion on the reliability of the financial statements of client enterprises in the official report of the auditor; in the development of tools for the practical implementation of the requirements of international professional standards to justify the degree of modification of opinion, providing sufficient confidence to interested users, minimizing their information risks.

Sources and research methods: the information base of the research was the International Standards for Quality Control, Audit, Review, Other Provision of Confidence and Related Services (2016-2017) of the Council on International Standards on Auditing and Providing Confidence of the International Federation of Accountants; official statistics on the market of audit services in Ukraine (2014–2017); scientific publications; personal observations of the author.

The study used methods of analysis and synthesis; systematic approach and systematization; dialectical, logical, economic and statistical methods.

Results and practical significance: the obtained results allow us to conclude that in order to ensure the proper quality of performance of tasks for auditing the financial statements, auditing entities must, with due care and professional skepticism, approach the substantiation of their opinion, especially if it is modified. The proposed logical chain of formation of professional judgment and independent opinion of the auditor focuses on the general and specific factors influencing the choice of its type. The pragmatic value of the research is the algorithm for determining the effect of compliance with the assumption of the continuity of client enterprises on the choice of the type of auditor’s opinion with regard to its possible modification. Matrices of influence of influential groups of factors and the degree of modification of the auditor’s opinion (? opinion with caution, ? negative opinion, ? refusal to express an opinion) are tools for effective navigation in order to implement the requirements of the International Standards on Auditing.

Keywords: professional judgment, opinion of an independent auditor, provision of confidence, modification of opinion, material distortions, substantial uncertainty, continuity of activity.